- Title
- Financial Inclusion, Economic Development, and Inequality: Evidence from Brazil
- Author(s)
- Julia Fonseca Julia Fonseca (University of Illinois at Urbana-Champaign)
- Adrien Matray Adrien Matray (Princeton University, NBER, and CEPR)
- Abstract
- We study a financial inclusion policy targeting Brazilian cities with low bank branch coverage using data on the universe of employees from 2000–2014. The policy leads to bank entry and to similar increases in both deposits and lending. It also fosters entrepreneurship, employment, and wage growth, especially for cities initially in banking deserts. These gains are not shared equally and instead increase with workers’ education, implying a substantial increase in wage inequality. The changes in inequality are concentrated in cities where the initial supply of skilled workers is low, indicating that talent scarcity can drive how financial development affects inequality.
- Creation Date
- 2022-09
- Section URL ID
- Paper Number
- 308
- URL
- https://gceps.princeton.edu/wp-content/uploads/2023/03/wp308_FonsecaMatray_Brazil_unbanked.pdf
- File Function
- Jel
- D63,E24, E58, G21, J30
- Keyword(s)
- Brazil, Financial Inclusion Policy, Wage Inequality, Banks
- Suppress
- false
- Series
- 3